Oil & Gas Mergers and Acquisitions report–Yearend 2017

Working under pressure

Despite higher prices and a nascent recovery across the oil and gas industry, overall mergers and acquisitions (M&A) activity declined year-over-year in 2017. However, there were a number of high profile transactions across the upstream, midstream, and downstream sectors, and more positive fundamentals could generate significant deal opportunities in 2018 as the industry continues to work under pressure.

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What’s ahead for M&A in oil and gas?

While some headwinds remain, oil and gas market fundamentals now appear more stable. Several trends seen in 2017 will likely play out over the course of the next year. Factors to consider for 2018 include:

Oil prices are well above the 2016 nadir, and both drilling and production continue to rise—upstream companies should consider further optimizing and consolidating their asset portfolios for a potential recovery.

Oilfield services (OFS) companies will likely need to continue to expand completions offerings as the US-drilled but uncompleted well count continues to increase.

US exports of oil, refined products, and natural gas are expected to grow—potentially shifting the domestic and international energy trade balance—and may provide opportunities for well-positioned midstream and downstream players.

2018 holds promise for increased deal flow year-over-year as the industry continues to adapt to an evolving energy landscape, but pitfalls remain. To be ready for 2018, it is important to take stock and gain a better understanding of 2017 oil and gas M&A activity. Download the report to take a deeper look.

Looking back at 2017: M&A in oil and gas

2017 oil and gas M&A activity was muted despite a strong start of the year and a range of positive industry indicators, including rising oil prices, increasing US production, and continued OPEC production restraint. Several trends stood out:

Even with a lower upstream deal count in 2017, the $158 billion worth of transactions was the highest since 2014. The sector had a strong first quarter, moderating in subsequent quarters as the Permian deal flow slowed.

The number of OFS transactions were up, with several deals increasing consolidation of players in key regions like the Permian Basin.

Across all segments, the push for consolidation across regions, portfolios, and service lines appeared to drive a significant portion of transactions in 2017.

After heating up in 2016, the oil and gas M&A market noticeably cooled in 2017, with some players moving from optimism to caution. Overall, it ended up looking much more like 2015 rather than 2016. However, as global crude stocks decline and industry investment rises, returning confidence could translate into a return to increased deal flow in 2018 and beyond. The upstream sector continues to lead, but as production continues to grow, it could unlock interest in the OFS, midstream, and downstream sectors as well.

View past Oil & Gas Mergers and Acquisitions reports

Global oil and gas mergers and acquisitions were on the upswing during the first half of 2017. Do the trends driving increased M&A activity signal a sustained global oil and gas market recovery? What factors should the industry watch in the second half of the year to assess the strength of the recovery?

Price downturns and bankruptcies in 2016 didn’t impact the oil and gas industry as much as predicted. In fact, M&A deal value recovered to exceed 2014 and 2015 levels. With prices recovering, what is the outlook for 2017? Read our trends and predictions for oil and gas M&A and discover how your business will be impacted.

The report covers the first half of 2016 deal activity for each sector of the oil and gas industry, examining overarching trends and highlighting individual deals for discussion. Understanding the strategies behind energy sector M&A participants will give some insight as to what to expect for the rest of 2016 and beyond.

The decline in commodity prices has affected all sectors of the oil and gas industry, and mergers and acquisitions (M&A) activity has hit the lowest levels in years. There was a rise and fall during 2015, but expectations for an uptick on deals did not come to fruition. What can this mean for the oil and gas industry in 2016?

For the oil and gas industry, the M&A deal market recovered somewhat in the second quarter of 2015, both in terms of number of transactions and overall value relative to the first quarter, due in part to the announcement of one large international deal.

For the oil and gas industry, the M&A deal market in 2014 started stronger than 2013 and with a total year-end deal value of about $350 billion, surpassed 2013 by $130 billion. By July 2014, however, deal making began to slow before plummeting late in the year along with global oil prices.

For the oil and gas industry, 2013 was a year to focus on the development of resources. There was a drop in merger and acquisition deal values from $349 billion in 2012 to $205 billion in 2013, or 41 percent. Many producers focused on developing properties they acquired in previous years, streamlining operations, and maximizing the return on assets held. The industry completed 119 fewer deals in 2013 than in the previous year.

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Executive Director | Center for Energy Solutions

As an executive director for the Deloitte Center for Energy Solutions, Deloitte Services LP, Andrew works closely with Deloitte’s Energy, Resources & Industrials leadership to define, implement, and m... More

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